This is the first part of a three-part series on headwinds facing the crude market.
These have been interesting times in the crude market. Prices had been trading comfortably above $50/b since late March, with bulls re-trenching on the idea that Saudi-led OPEC supply cut will soon tighten balances.
And while today’s price declines could prove temporary, a measure of caution is advised to all bulls, for two key reasons — reasons that we’ve been watching closely since November.
First, the expectation that the OPEC supply cuts will tighten global crude supply is overdone. While there is likely a limit to how many OPEC barrels US shale can replace, anyone who thinks the godfathers of the shale revolution are going to sit idly by as prices soar probably wrote a book on peak oil.
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